SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 3, 1997
CONTINENTAL AMERICAN TRANSPORTATION, INC.
Exact name of Registrant as specified in charter)
Colorado 0-18729 84-1089599
(State or other (Commission (IRS employee
jurisdiction of file number) identification
incorporation no.)
495 Lovers Lane Road, Calhoun, Georgia 30701
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(Address of principal executive office) Zip Code
Registration telephone number, including area code: (706) 629-8682
Item 5. Other Events.
On June 3, 1997, Continental was served with a lawsuit
entitled RANA Investment Company and RIC Investment Fund,
Ltd. (f/k/a Reg-S Investment Fund Ltd.) v. Continental
American Transportation, Inc. The lawsuit was filed in
the United States District Court for the Northern
District of Georgia, Rome Division, Case No. 4:97-cv-
0165-HLM.
The Board of Directors of Registrant had been in negotiations
with the plaintiff's representatives over the course of the
last several months and such representatives had given no
indication that the plaintiffs were either threatening or
intending to commence litigation.
The complaint alleges that the Registrant has refused to honor
its contractual obligations to convert certain Convertible
Promissory Notes held by the Plaintiffs into the Registrant's
common stock. The Notes were issued on March 19, 1996 and
April 2, 1996. Plaintiffs' claims arise out of notices of
conversion delivered to the Registrant on December 30 and 31,
1996. The Board of Directors of Registrant was negotiating to
redeem the subject Notes as opposed to permitting their
conversion into common shares.
Along with the complaint, Plaintiffs also filed and served a
request for a temporary restraining order seeking to restrain
the Registrant or its directors, officers, employees, agents
and counsel from engaging in any act, transaction or dealing
which could result (1) in the issuance of additional shares of
the Registrant's common stock pending the resolution of the
complaint or (2) in the reduction of the Registrant's
authorized stock.
A hearing on Plaintiffs' request for a temporary restraining
order was held on June 5, 1997. After negotiation between the
parties, a consent order restrains the Registrant for a period
of 14 days from doing any of the following: (1) approving an
increase in the Registrant's authorized number of common stock
shares; (2) issuing additional shares of the Registrant's
presently authorized but unissued common stock; (3) issuing
additional securities which grant the securities holder the
right to convert or exchange into the Registrant's common
stock; (4) honoring the exercise of the conversion, option, or
warrant rights of any other securities holder into the
Registrant's common stock; (5) entering into or performing any
other transaction or
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agreement that could dilute the common stock shares claimed by
Plaintiffs; and (6) reducing the amount of the Registrant's
authorized common stock.
The Court has scheduled a hearing for June 19, 1997 on
Plaintiffs' request for a preliminary injunction.
The Board of Directors always intended to treat all investor
noteholders and debenture holders with conversion rights,
including the plaintiffs, fairly and properly. The Registrant,
on the advice of counsel and as a result of the lawsuit and
the order issued, must suspend current negotiations,
conversions and settlement talks with its other noteholders
and debenture holders until resolution of certain issues at
the scheduled June 19th hearing or later as these claims are
litigated in the subject lawsuit. The Board of Directors
has uncovered what appears to have been significant
short-selling of its common shares prior to
Registrant's receipt of plaintiffs' notices of conversion,
which if true, represents material violations under the
subject agreements. The Board of Directors reiterates its
intentions to vigorously prosecute the defense of this lawsuit
and to litigate any available counterclaims.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Brian Henninger
Brian Henninger
Chief Financial Officer
Dated: June 9, 1997
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